Leopold, City Officials Defend Burlington Telecom Expense Payments
In a Burlington courtroom today, Burlington Chief Administrative Officer Jonathan Leopold defended his decision to charge city taxpayers — rather than Burlington Telecom subscribers — for some of the costs associated with restructuring the embattled municipal telecom.
"To preserve this asset [BT] and ensure recovery of taxpayer funds, it is in my opinion that the money was appropriately charged to the general fund," Leopold said during his 20-plus minutes on the witness stand in Vermont Superior Court in Burlington.
Two Burlington residents — former city councilors Gene Shaver and Fred Osier — have sued the city in an effort to force Burlington Telecom to repay the $16.9 million BT was loaned from the city cash pool, in violation of its state license agreement.
Monday's hearing was called to determine whether city officials violated a court order last February barring them from spending money on Burlington Telecom-related expenses and not charging the costs to BT within 60 days.
At issue in today's hearing was roughly $354,000 paid to a variety of consultants out of the city's general fund. In all, the city and BT has racked up close to $1 million in legal and consulting fees since July 1, 2009. Of that, more than $620,000 has been paid for out of Burlington Telecom revenues. In December, the costs hovered around $625,000.
A key recipient of that $354,000 was Dorman & Fawcett, which was paid more than $275,000 for a variety of services. Those services included renegotiating BT's lease with CitiCapital, talking with the ratings agency Moody's, and seeking new investors for the struggling telecom pursuant to the suggestions laid out by the Blue Ribbon Committee on Burlington Telecom.
Under questioning from the plaintiffs' attorney, Bob Hemley, Leopold said work conducted on behalf of the Blue Ribbon Committee — a panel established by the city council — was charged to the general fund because it was not specific to BT's operations, but rather sifting through the city's own options on how to proceed given BT's debt load, legal constrictions and regulatory violations.
Hemley told the court it's hard to understand how the city can justify spending that money on behalf of BT — rather than making BT pay the money. Talks with CitiCapital were an attempt to renegotiate its municipal financing lease to keep BT's equipment in place; that equipment is necessary for BT to operate and provide services to its customers.
Under questioning from Hemley, Terry Dorman of Dorman & Fawcett said that if CitiCapital were to reclaim ownership of BT's equipment that it could force the telecom to cease operations unless BT could find new equipment. Also called to the stand was Scott Schrader, Burlington's assistant chief administrative officer, and a subordinate to Leopold.
Leopold was the third witness called during the two-hour hearing but his testimony was probably the most anticipated. Leopold is seen as the financial wizard behind City Hall's proverbial emerald curtains and the man who made key decisions to loan $16.9 million to Burlington Telecom over the course of several years — a loan that violated a key condition of the muni telecom's state certificate of public good.
"That decision to charge those bills that, in part, relate to the renegotiation of the CitiCapital lease, to the general fund," asked Hemley. "That is a decision you made, correct?"
"In consultation with the management team that has been working on this matter," answered Leopold.
"A decision for which you take responsibility?" asked Hemley.
"Ultimately it is my responsibility to make my decision. I don't exclusively do this on my own. I seek consultation with legal counsel and financial advisors," responded Leopold.
It wasn't all cut and dry answers. As Leopold has shown before the City Council, he can at times be evasive, if not confounding, to councilors attempting to get a straight answer. On the stand, Leopold proved no easy quarry for Hemley, himself one of the more skilled trial attorneys in Vermont.
At one point, as Leopold began to refute Hemley's characterization of various documents, including the scope of work conducted by Dorman & Fawcett, Judge Helen Toor had to step in and verbally separate the pair. The exchange went like this:
Hemley: "The renegotiation of the lease with CitiCapital for the equipment used by Burlington Telecom is one of the things that Dorman and Fawectt has been doing, correct?"
Leopold: "Yes it is."
Hemley: "It has billed the city, in part, for those efforts, correct?"
Leopold: "It has billed the city for the work under its … "
Hemley: "Can you answer that question? Has it billed the city for the efforts it has done in renegotiating the Citi lease?"
Leopold: "It has billed the city for the work it has done pursuant to the letter of engagement and part of that involves a liaison with CitiCapital."
Hemley: "I think that the answer to my question is yes. Would you agree with that?"
Leopold: "I think that the answer is misrepresented to say that it is their primary purpose or sole purpose. Is it an element of what they are doing? Yes."
Hemley: "Mr. Leopold, I'm not misrepresenting anything. I asked what I think is a simple question."
Leopold: "I didn't suggest that you were."
"Gentlemen, gentlemen, let's not argue," interrupted Toor.
Toor gave no indication how soon she would rule on Hemley's request to find the city in contempt of last year's order. Hemley told Toor if she ruled in his clients' favor that they would like to see BT immediately repay the $354,000 owed to the city's general fund.
And if the judge rules in favor of the Leopold, Shaver and Osier will pay for the cities legal expenses in regard to this frivilous suit, is that correct?
Posted by: oy | May 23, 2011 at 07:01 PM
@OY... I would LOVE to have you explain to me as a tax payer in the city of Burlington why this is a frivolous suit. As the wise Inigo Montoya once said, "You keep using that word. I do not believe it means what you think it means." Explain to us what exactly is frivolous about the lawsuit. Why should Leopold not be held accountable for stealing money from the city of Burlington keep this entity afloat? I've been told by rude BT staff time and time again why they can't provide me with service (forcing me to go with Comcast) so why should i be forced to foot the bill for their terrible mismanagement? Why should I continue to pay for consultants and lawyers to help them fight their battles? What good is in it for ME if BT stays alive?
Posted by: Jeff | May 23, 2011 at 08:48 PM
Is that what the Progs call him, "the Leopold"?
This suit passed the threshold of potentially frivolous a l-o-o-o-ng time ago. If "the Leopold" felt confident in his position, he'd be giving short, direct answers to simple questions.
Posted by: Jimmy | May 23, 2011 at 10:22 PM
OY, you have a childlike understanding of this situation. To characterize this as frivolous is to also state that the Judge is incompetent and a fraud. We've been ripped off, dude! $17 million ai'nt chump change and neither is the $50 million that Leopold and Kiss squandered by their awful mismanagement of BT.
This is Burlington's crime of the century! How many Vermont towns mismanage and squander a $67 Million dollar investment down to ZERO. That is what we have left, OY - ZERO. Less than ZERO actually. Frivolous? Not by my standards
Posted by: Howard | May 23, 2011 at 10:27 PM
Leopold is such a professional wanker. What a mess he created through arrogance, a sense of invincibility, and ultimately through trying to cover up his ways and means. A fraud has been perpetrated on the citizens of Burlington, those that did and did not support BT, and he has mortgaged our future.
My only question remaining to those who are supposed to protect us taxpayers from such professional malfeasance: where are you? We need help!
Posted by: Frank | May 23, 2011 at 11:32 PM
Well frankly, Im glad BT brought this to the forefront. Kiss and Leopold have been absolutely terrible stewards of this City. BT takes the press, but lets not forget the debacle that was the firing of Parks and Rec, the zoning re-write fiasco, the Moron plant BS, the Bike Friendly Street trial THAT STILL ISN'T DONE, Kiss' sanctuary city, trying to ban firearms in City limits and Leopolds tampering of ballot boxes TWICE and of course IRV. These two are and have been utter failures right from Day 1. BT was just the straw that broke the camels back.
As for The Leo, they should have cuffed him and thrown him in the clinck on contempt charges. But, TJ is such a coward he wouldn't do anything to disturb the left wing and his future political endeavors by holding crooks accountable.
Donovan should also be relieved of his duties, and someone needs to haul Sorrell into court and ask why he is busy with soda taxes as opposed to doing his job of protecting the people of Vermont. Where's Scumlin's new DPS comish on this one? Haven't heard a peep out of her since she was appointed. Surely she must have formed an opinion by now?
Posted by: Jcarter | May 24, 2011 at 08:27 AM
Buster, I agree and have been mentioning this for a while. All the revenues currently being generated by BT are Citi's. BTC owns nothing, it's all Citi's. Moreover, one has to ask why Citi hasn't repo'd their equipment yet? Maybe because right now that BTV is generating revenue for them free of charge AND they still own the lines and equipment to take at any point in time they choose?
When BTC defaulted they should have closed up shop that day. Everyday that passes BTC generates money that goes into their accounts, and someday Citi is going to come calling for that money, at which point BTC isn't going to have it on hand and someone (the taxpayers) are going to have to cough it up. The City of Burlington is on the hook for 17Million to itself, 33+ Million to Citi and all revenue generated this past year. Plus the 650,000+ that it has spent trying to sell the company that they don't actually own. BTC, Kiss, and leopold continue to bleed this city dry even as we speak. Meanwhile, Sorrell appointed the most incompetent attorney he could find to investigate, and TJ is hiding out in his office hoping the FBI will bring charges so he doesn't have to upset the progs in BTV. Sad, very sad.
Posted by: Jcarter | May 25, 2011 at 08:05 AM
"one has to ask why Citi hasn't repo'd their equipment yet?"
Citi's probably looking for a buyer while BT's "looking for a buyer." Citi owns the cable in the ground, the head end equipment, everything. They just need to find someone to transition it to a new business entity and voila, a "new" telecom company with exactly the same customers as BT.
It would make no sense to repossess the equipment before they are ready to flip it over to someone else. That would leave current BT customers without service, and they'd all go to Comcast. Why try to coax people back when all you have to do is change the letterhead on their bill?
Posted by: Jimmy | May 25, 2011 at 09:33 AM
"one has to ask why Citi hasn't repo'd their equipment yet?"
Citi is in the finance Business. It is embarrassing to be hustled by a small town thief like Leopold number 1.
Number two there is no value in the customer list or little value, they do not own the list any way thats the way leases work.
Citi is in Force Majuer forced to keep the doors open by government the PSB. Number three.
The Dorman and Fawcett is just posturing and more good old boy payola, back slapping and dancing around the larger issue of what happened to the money from the cash pool. It is unlikely that BT signed up a significant amount of customers to warrant the expenditure of 17 million.
Their figures were 1250 per hook up do the math they spent what ten times that amount on what on who and where did it go??
The SHTF at the same time the airport requested that their monies not be commingled with the city of Burlington cash pool per federal statute. Leopold is lying through his teeth.
On a separate issue Shay Totten should be taken to the woodshed for publishing the crap about Fogel's wife what low life prurient puritanical Bull. like it is anyone's business this is disgusting when there are real stories to be told.
Posted by: Buster | May 25, 2011 at 11:30 AM
Buster I will agree with the crap about Fogel's wife. Shay's a real work of art, not only did he pull a bit of sleezy move but now he is all proud of himself too.... doing a radio show today about "breaking the story" and this tweet
"
ShayTotten profile
ShayTotten Thanks @bfp_news @kilianvt for the credit as being the reporter whose Qs launched #UVM investigation: http://bit.ly/lS7mah #BTV #VT"
Posted by: Jcarter | May 25, 2011 at 01:40 PM
On Bob Dylans 70th birthday these lyrics come to mind concerning Kiss Leopold conduct.
Lay Lady Lay Lay across my big brass bed and and stay, stay until the break of day when Leopold and Kiss can take your 16.9 million and head off to play, lay lady lay,lay across my big brass bed and watch Bob and Jonathan head for the islands and watch our money go away.
Happy birthday Bob, not Kiss I mean but Dylan.
Posted by: dale tillotson | May 25, 2011 at 08:03 PM
@ Tyler "Ministry of Truth" Machado:
I agree with Buster that OY is an "idiot." (See last line of posting dated May 24, 2011 at 07:50 PM, above.) But apparently if I had said it, my post would have been taken down under your interpretation of this site's blogging policy. (See lengthy discussion about blogging policy on recent thread about so-called "peace activists" protesting bin Laden killing.)
So, how come your policy only applies to me?
Posted by: the other david | May 25, 2011 at 11:05 PM
OD: Because I straight up missed it. But thanks for bringing it to my attention. :)
Friendly reminder that there's no need to resort to petty insults, everyone...
Posted by: Tyler Machado | May 26, 2011 at 09:21 AM